CRE Facing Worst Year Since Early 1990s

Mon, 2007-11-26 16:37

The commercial property market is facing its worst year since it crashed in the early 1990s, the Sunday Times reported, citing a new survey by forecasters that includes CB Richard Ellis, the world's biggest property consultant.

The firm predicts that returns will plunge to almost zero by the end of this year, according to the article.

The plummeting returns - down from 18.1 pct last year - follow a steep correction in commercial property that has wiped an estimated 14 bln stg off the value of the 350 bln stg investment market between July and October. It is likely that values will drop further between now and the end of December, the newspaper added.

The news will cast a further pall over the sector, which has suffered a rapid shift in sentiment since this summer's credit crunch.

Not everybody feels that way, however. The International Herald Tribune had a piece that rings true with what I feel like I've heard a lot lately. Some people see the current state of the market as a huge opportunity. This piece profiles an investor raising $400 million and he's looking intently at U.S. commercial real estate.

Further, real estate fears have driven down REIT stocks again. And that, of course, is leading some to think it's a great time to buy.